I have Site A and Site B.
VLAN 50 has been defined at both sites. site A VLAN 50 has an IP address. At Site B it is defined with no ip address.
I have configured L2TPv3 on a pair of routers that are trunked back to 3750s. I can ping across the tunnel, it is up. My question is at Site B, can I also define an IP address in the Vlan 50 on the 3750?
Then use that as the default gateway for hosts in Site B? So we can route locally to other networks..Or does the gateway have to be the one defined in Site A?
Yes, you need an IP address for the B site (same subnet).
Take a look at CE config section
of this document.